Why media transparency matters for the advertising industry

The ANA’s media transparency initiative dominated the advertising industry’s discourse in 2016. The ANA’s members voted ‘transparency’ their word of the yearand it has continued to resonate throughout 2017 as advertisers seek greater visibility over their media investments in the complex world of multi-channel marketing.

This week’s anniversary of the 2016 publication of the Ebiquity/FirmDecisions recommendations for the ANA has been marked by high-profile commentary, including a hard-hitting piece from Bob Liodice, President and CEO of the ANA and Doug Wood, senior partner in Reed Smith. This in turn has prompted Brian Wieser of Pivotal Research to counsel investors in the major communications groups to exercise caution given the increasing profile of media transparency as an issue for advertisers.

It would be easy to think that media transparency is all about media trading incentives, such as rebates, given the furore surrounding the K2 Intelligence report which was published in June 2016. The study sparked a firestorm of industry debate which over-shadowed the full ambit of both the K2 Intelligence report itself and the true importance of media transparency for advertisers.

The K2 Intelligence report defined transparency as ‘the full disclosure of relevant information required for informed and intelligent decision-making’. Therefore a non-transparent business practice is one in which an advertiser does not have full access to the information needed to make the best possible media choices. These choices transcend the financial elements and embrace the full spectrum of important disciplines that comprise effective media stewardship.

Much has been written and said this year about digital transparency in particular, and especially about brand safety. While the digital market does exhibit particular characteristics that warrant real attention from advertisers, it only represents one aspect of media transparency, which embraces all media and covers the full range of media management needs, from media strategy through to measurement and reporting.

This full range was covered comprehensively in the ‘Prescriptions, Principles and Processes’recommendations issued by the ANA one year ago, and authored by Ebiquity and FirmDecisions. This document sets out a roadmap for the ANA’s members on how to achieve media transparency in its full sense. There are seven key strategic platforms to the recommendations that, taken together, provide advertisers with the most far-reaching means of achieving media transparency through effective stewardship.

However, the true objective is not just to take control and make better media investment decisions. The ultimate aim is to improve media effectiveness and achieve improved return-on-investment. This matters to everyone in the advertising industry. Advertising must demonstrate its worth to companies, and the rewards for successful advertising should be shared between the advertisers and their commercial partners. Effectiveness and the demonstration of success should be everyone’s aim, and is in the best long-term interests of the advertising industry.

Here is how the seven recommendations contained in the ANA’s guidelines help achieve improved media effectiveness:

Agent versus Principal

Where the advertiser agrees to the agency acting as a principal, the advertiser should have disciplined, reliable processes to manage the potential conflict of interest

Advertisers should actively pursue the most effective media strategy, planning and buying and this should not be compromised by the advertisers’ trading partners’ own interests. A client’s agent will always promote the best interests of the advertiser while a media agency acting as principal may have a conflict of interests based on the potential arbitrage to be made. A clear focus on media effectiveness requires that any potential conflicts of interest that may affect either planning or execution should be identified and rationalised at the planning stage.

Equally, advertisers should benefit from ‘principal trading’ that is unequivocally shown to be advantageous, as long as they are able to achieve the right level of visibility over the media process, including the margins being made by the transacting parties.

Contract content

Advertisers should ensure that contracts with their media agencies contain robust provisions to deliver full transparency

The essence of media transparency is a clear set of terms between the advertiser and their commercial partners, including the chain of intermediaries involved in media transactions. The contracts should be set up to ensure that the advertiser can maximise ‘working’ dollars while rewarding their trading partners properly for their contribution, with transparent terms-of-trade throughout.

This isn’t just good business practice. The basis of the right contract is that the parties are dedicated to the pursuit of effectiveness and the contract should capture that intent and reflect the scope of work that drives success. The rewards for that success should be clearly stated in the compensation structures contained in the contract.

Contract audit rights

Advertisers should have robust and far-reaching audit rights which allow them to fully track contract compliance and measure media value delivery

The contracting parties should be committed to contract compliance such that the intended outcome of the contract is both delivered and seen to be delivered. If one of the main objectives of a good contract is the maximisation of ‘working’ dollars, the ability of the advertiser to ensure that outcome will contribute to media effectiveness.

As media transparency is fundamental to effectiveness, management control over media processes is important. Advertising budgets represent a significant investment in working capital, and should be subject to the same kind of scrutiny as any other large capital outlay. This has traditionally not been the case, so corporates should review the way that they structure their investment processes and specifically have governance responsibility allocated to a ‘chief media officer’ or a similar function. The accountability of advertising should be a corporate priority, and be subject to a high-level of corporate accountability.

The measurement of marketing and advertising effectiveness should be a systematic and rigorous part of any company’s operations, and media should be held to account within companies with learnings applied continuously. Advertisers should also constantly review their external resource needs and the resultant contracts to ensure that the value of investments in marketing partners is also maximised.

Data and technology

Advertisers should take ownership of data and exert control over the media technology used on their behalf

This aspect is probably the most talked-about facet of the media transparency debate, embracing such diverse issues as independent measurement of digital media properties, brand safety, viewability, ad fraud and ad blocking.

The programmatic market is comfortably the least transparent to advertisers, as amply proven by the recent study conducted by Ebiquity and Ad/Fin on behalf of the ANA and Association of Canadian Advertisers. This study, called‘Programmatic: Seeing through the financial fog’, demonstrated the lop-sided ratio of ‘working’ to ‘non-working’ dollars in programmatic. There is a persistent issue with the effectiveness of programmatic, partially caused by the high proportion of advertiser budgets consumed by service and data costs. Section 5 of the ANA recommendations document details the process by which advertisers should:

create a data management framework

select the most appropriate partners

own and control data

measure results

manage programmatic trading

The result is not just better transparency of data and money, but a way of harnessing the unquestionable potential of digital media and overcoming the considerable obstacles to success. Effectiveness in programmatic in particular requires a highly structured approach by advertisers, with a high degree of advertiser control.

Advertiser responsibilities

Advertisers are responsible for more active stewardship of their media investments and fair compensation of their agency partners

Traditionally, advertisers delegated responsibility for media management to their media agency partners, and while intermediaries still play a vital role in media success, advertisers need to manage their channels more actively to maximise effectiveness. The appointment of a ‘chief media officer’ is key to this, and so is the obligation to actively manage in-house resources (marketing, procurement, legal, financial, technology) and the external provider base.

This carries obligations such as the need to put in place compensation arrangements for partners that are fair and which motivate and incentivise the right performance and behaviours. Included in this is the need to pay providers in a timely way in recognition of their own obligations. Good governance can make an identifiable contribution to media success.

Code of Conduct

Advertisers and media agencies should establish a culture of trust in their relationships via a specific code of conduct

There is no doubt that the most effective advertising derives from good working relationships between advertisers and their chosen expert practitioners, and a mutual code of conduct is the recommended way to enable good day-to-day operational practices. The parties have obligations to each other and it is important that everyone involved in the advertising process understands their accountability.

There are responsibilities that the advertiser owes, but the most important obligation of the practitioner partners is to work in the interests of the advertiser in all aspects, including media planning, buying, technology provision, use of research and data and the all-important reporting of results.

Effectiveness measurement relies on full and unfettered access to the right data, and advertisers need to ensure that they are working with partners who are both committed to effectiveness and its measurement. Media transparency is all about having the right information to make the best investments.

In the era of zero-based budgeting, advertising needs to constantly prove its worth and justify its investment. Accountability is therefore crucial and the measurement of effectiveness a necessity. While intermediate measures such as audience delivery are an important component, the measurement of business effect is the true litmus test. Advertisers should create the environment whereby advertising has the best possible opportunity to succeed.

The other stakeholders in the industry, agencies, ad tech companies, media vendors, measurement providers, rely on the success of advertising to both justify their role and earn their rewards. Successful advertising pays everyone, and therefore an increased focus by advertisers on media transparency to improve effectiveness is good for the whole advertising industry.

You can revisit the seven strategic platforms of Media Transparency: Prescriptions, Principles, and Processes for Advertisers by filling in the form below.

About Author

Nick has spent 30 years in the media industry, principally having co-founded Manning Gottlieb Media (MGM) in 1990. MGM became one of the most highly respected and fastest-growing Media Specialist agencies before becoming part of Omnicom in 1997. His most recent position was CEO of OMD’s operations in the UK. Nick also co-founded OPera, the media negotiation arm for OMD and PHD, with billings of £1 billion. He joined Ebiquity in October 2007 as Chief Operating Officer with special responsibility for the Analytics division before becoming President, International, in overall charge of Ebiquity’s non-UK based operations. Nick is now Chief Strategy Officer, with responsibility for developing and implementing Ebiquity’s strategy across its three business segments.